The real Wolf of Wall Street declared the current stock market turmoil as a “paradigm shift”.
Speaking on Fox News late on Monday, former stockbroker Jordan Belfort praised retail investors’ ‘brilliant’ revolt last week after the stock price of video game retailer GameStop rose dramatically when a group of Reddit users have come together to buy the distressed retailer’s purchase options – hurting short sellers in the market.
“The little one is finally equipped, the information now travels instantly, it used to be just the big ones, they paid the analysts … so now the little one is finally able to play the same game, at least a little bit,” Belfort said. ‘And there will be a radical change, it will not be the same.’
“I believe this is a paradigm shift now,” said Belfort, who spent 22 months in prison after pleading guilty to fraud and money laundering in 1999, and has since rebuilt his life as a motivational speaker.
The real Wall Street Wolf Jordan Belfort said that the rise in GameStop’s shares last week was the beginning of a ‘paradigm shift’ in the stock market
GameStop’s stock skyrocketed from less than $ 20 in January to close at around $ 350 last Wednesday and at one point peaked at $ 483 when a volunteer army of social media investors challenged major institutions that they had placed bets on the market that the stock would fall.
The stock was even wilder the next day, with the stock ranging between $ 112 and $ 483. On Monday, the shares fell 30% last week to $ 225.
“There are hedge funds that group together and will literally sell a stock almost to zero, outside the market. They try to spread negative news, investigations, and that’s what you see with GameStop, ‘said Belfort.
‘I think everyone knows that there is something wrong in the pit of the stomach. You can silence people, you can take people apart … and get away with it. Everyone knows – Republican or Democrat – that something is wrong. That’s why the two sides of the corridor came together in one thing, ‘he continued.
Speaking to Tucker Carlson, left, on Fox News, Belfort explained how the stock skyrocketed when an army of volunteer investors challenged large institutional hedge funds.
Belfort’s crimes were detailed in his early memoirs, The Wolf of Wall Street, which was later transformed into the 2013 blockbuster with the same name, starring Leonardo DiCaprio.
The film – directed by Martin Scorsese – chronicles Belfort’s youthful antics as president of Stratton Oakmont Inc., the company he started with a few desks and phones set up in an old Long Island workshop.
Stratton Oakmont was what is now called the “boiler room” that traded penny stocks – those of minimal value – and defrauded investors with the “pump and dump” type of stock sales, receiving large commissions in trading, often at at the expense of its investors.
GameStop’s stock skyrocketed from less than $ 20 in January to $ 483
Stratton Oakmont made a fortune using deceptive, high-pressure tactics to sell penny stocks at inflated prices. After artificially inflating the value, Belfort and others would divest themselves of their own shares before prices plummeted.
Speaking of today’s antics, Belfort explained how short sellers are investors who speculate that the price of a stock or bond will fall.
The strategy sees them borrowing shares to sell them, hoping to buy them back at a lower price in the future.
An army of amateur investors, using the ‘WallStreetBets’ forum on the Reddit online platform as a meeting place, sabotaged short sellers last week with a massive campaign to buy shares, pushing prices up.
Amateur investors who maneuver rich hedge funds have fascinated the financial press and disrupted the stock market.
On Monday, the stock fell 30%, from $ 316 each, to close the day’s trading at $ 225
Last week’s chart shows stock fluctuation with amateur investors raising the price
A month ago, the stock was trading at around $ 17 before receiving a big boost
Belfort praised small investors ‘furious as hell’ who were ‘tired of being trampled on by Wall Street, which they always were’.
“I take my hat off, by the way,” he said. “What they did is brilliant. They discovered real market inefficiency and a gap where something had been drastically over-sold and they could actually get enough purchasing power. They finally now have some ammunition to fight.
“The danger is that it will end badly for these actions and I hope people don’t lose money on the process.”
A group of protesters are gathered in the New York Stock Exchange (NYSE) building to protest Robinhood and bring their voices to the Wall Street negotiations amid GameStop’s stock chaos
The strong group of three million amateur investors on the Reddit forum exchange tips and boast of defeating ‘the system’. Some analysts described the situation as a battle of ‘nerds vs Wall Street’.
But Belfort said last week: ‘If you could prove that they are really in cahoots, then that would be illegal.
‘The problem is that it is a kind of loose collision where a person says,’ Let’s be together and stay strong. ‘And, theoretically, this is illegal.
‘But I doubt that the SEC [U.S. Securities and Exchange Commission] would try to make a case with something like that.
“I think what you need to understand is that, for the average person, there is money to gain from it and money to lose. You need to be very careful. ‘
Belfort spent 22 months in prison after pleading guilty to fraud and money laundering in 1999, and has since rebuilt his life as a motivational speaker. His crimes were detailed in his early memoirs, The Wolf of Wall Street, which was later turned into the 2013 blockbuster of the same name, starring Leonardo DiCaprio, portrayed
Belfort pleaded guilty in 1999 and agreed to become a government witness in a case against an accountant and other stock fraud defendants accused of falsifying company books and channeling money to a fake holding company and bank accounts abroad.
In 2003, after a broken marriage and a fight against drug addiction, Belfort was sentenced to 3 ½ years in prison and ordered to reduce the $ 110 million refund by giving 50 percent of his future earnings to the government.
Stratton Oakmont at one point employed more than 1,000 stock brokers and was involved in equity issues totaling more than $ 1 billion, including being behind the initial public offering for shoe company Steve Madden Ltd.
Belfort served 22 months at the Taft Correctional Center in Taft, California, in exchange for a court settlement with the Federal Bureau of Investigation for the bomb and eviction scams he directed that led investors to lose approximately $ 200 million and he was ordered to pay back $ 110.4 million that he cheated from stock buyers.
Belfort shared a cell with Tommy Chong while serving his sentence, and Chong encouraged Belfort to write about his experiences as a stockbroker. He now makes money as a motivational writer and speaker.
MARKET SWINDLER WHOSE LIFESTYLE AND DODGY WORK LIFTS YOU FROM COUNTRY STATES TO CHAIN
Belfort, from the Bronx, New York, started out as a trader at LF Rothschild, but claims he was fired after the 1987 market crash. He then claims to have founded Stratton Oakmont with friends, although other sources say he and his partners bought the original founder.
Stratton Oakmont was what is now called the “boiler room” that traded penny stocks – those of minimal value – and defrauded investors with the “pump and dump” type of stock sales, receiving large commissions in trading, often at at the expense of its investors. During his years at Stratton, Belfort developed a lifestyle of sumptuous parties and heavy use of recreational drugs, especially the metacalone – known by the Quaalude brand – that he became addicted to.
Jordan Belfort served 22 months in prison
Stratton Oakmont at one point employed more than 1,000 stockbrokers and was involved in equity issues totaling more than $ 1 billion, including being behind the initial public offering for shoe company Steve Madden Ltd. The company’s notoriety, targeted by police officers through virtually its entire history, it inspired the films Boiler Room (2000), about unscrupulous market traders, and the 2013 biopic The Wolf of Wall Street.
The National Association of Securities Dealers (now the Financial Industry Regulatory Authority) began to pursue Stratton Oakmont in 1987 and, eight years later, managed to permanently close it in 1995. Belfort was then indicted for securities fraud and money laundering.
Belfort served 22 months at the Taft Correctional Center in Taft, California, in exchange for a court settlement with the Federal Bureau of Investigation for the bomb and eviction scams he directed, which led investors to lose about $ 200 million and he was ordered to pay back $ 110.4 million that he stole from the stock buyers.
Belfort shared a cell with Tommy Chong while serving his sentence, and Chong encouraged Belfort to write about his experiences as a stockbroker. He now makes money as a motivational writer and speaker.